Are you considering waiving contingencies?
It is such a delight to own your home. If you live in an apartment, the joy of no longer worrying about an upcoming rent payment or having to avoid the landlord is a relief. There is a kind of healing the soul finds when you have a building on a piece of land that you can boldly refer to as your own.
While owning a home is important, it is equally important to understand the contingency clause as it relates to buying a house. The contingency clause gives you the right to back out of any contract and get back the earnest money you have put on any property.
Firstly, we will look at three kinds of contingencies you should put an eye on when you want to buy a house. Also, we will look at the dangers of waiving contingencies.
Appraisal Contingency
The price of properties in the Real Estate Industry fluctuates from time to time. The instability of price as well as the dubious activities of buyers is a worthy motivation for having the Appraisal contingency. So, what this type of contingency does for you is that, in times when a property is valued above a specified amount, you can back out. When you back out of such a property, you can get back your earnest money.
The nature of the Appraisal Contingency differs. It depends on the agreement reached by the seller and the buyer. However, a breach of this contract by the buyer can lead to the termination of the contract itself.
Financing Contingency
Financing contingency or mortgage contingency comes in handy when you intend to borrow money to buy a property. This clause gives you the right to claim your earnest money or terminate a purchase if you are unable to get money to buy a property from a bank or mortgage broker.
Inspection Contingency
No one likes to buy a property and discover it is bad or certain parts of it are in a deplorable condition. The bad part of the situation comes when you are not able to do anything about it, and worse, when you have spent lots of money to purchase the property.
Inspection contingency helps you to fully inspect a property within a specified period, even after you have put down some money. What this does is give you the right to terminate a contract if you find things regarding the property that do not meet your standards after inspection, rather than purchasing the property and regretting your choice later. If you still want to go with purchasing a property after discovering its faults, you can negotiate a better offer with the buyer.
The inspection contingency saves you from regretting a purchase. This is because you were not able to discover its faults early enough.
Dangers of waiving contingencies
Here are the dangers you may incur by waiving contingencies:
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Sellers May Take Advantage of You
Many sellers are on the lookout to make money and take advantage of inexperienced buyers these days. So, when you waive the contingency clause, it will give them the right to either hold onto your earnest money or make you buy a property you do not like.
2. You May Lose your Earnest Money or Good Faith Money
The money which you give to a seller of a property to indicate your interest in purchasing her/his property, often called earnest money, can be lost. In the event where you have waived the financing contingency and you are unable to get funds, you may lose your earnest money, and the amount can be quite substantial.
3. You May Lose the Power to Terminate or Negotiate Contracts with the Seller
The contingency clause makes it easy to terminate a contract that you are not comfortable with. Waiving the contingency clause puts the power to terminate or negotiate the contract of a property in the hands of the seller. This power may be used to hurt you.
4. You May Get a Law Suit on Your Hands
A seller can file a lawsuit against you to make you buy a property. The power you put in the hands of the seller by waiving off the contingency clause can be used to get you to do anything the seller wants, a lawsuit is how this can be done.
These are thoughts you should place at the forefront of your mind when next you want to purchase a property. Waiving contingencies will cost you more than you know.
Buying a house in 2022?
Are you thinking about purchasing a house and considering waiving contingencies, or are you still confused about what contingency clause to be on the lookout for? You should give Tammy Gazda a call.
With over 20 years of sales experience in the Metro Phoenix area, Tammy is smart, knowledgable, experienced, and attentive. She has a wide real estate network, and she will put all these advantages to work on your behalf. All you have to do is reach out to her at (480)-848-7173.